The acquisition of a portion of royalty rights from Midas Gold asset in Valley County, Idaho is one of the few deals which have started to be done in these depressing times. These deals have a long term focus and both the parties are going to benefit. The development stage assets are available at very low valuations and hence it is a good idea to put idle cash to work. Franco-Nevada had $825 million cash as on March 31 and it has zero debt on books. There are other companies which have good gold assets like Pershing Gold Corporation (PGLC). Pershing Gold is about to start production in 2014, and is currently trading at a huge discount to potential. The acquisition of royalty rights by Franco-Nevada will help Midas Gold ''to continue advancing the evaluation of the world-class Golden Meadows gold-silver-antimony-tungsten project in Idaho''. The project has a large high-grade mineral resource with a potential to support a long-life and low-cost, open pit mining operation. These properties have been mined earlier and restoration will lead to a new mine with modern facilities. Franco-Nevada should perhaps attempts more of these acquisitions over the next few quarters to take advantage of the valuations. The stock, meanwhile has retracted from recent highs but is showing some resilience now. The volumes yesterday were slightly better and it seems that it may make another attempt at $44.50. Obviously, if gold prices fall down, then this may not happen. $1320 is likely to be a key level for gold, and if that holds for some time, then some confidence may come. However, if Fed reduces or slows down the monetary easing, then the whole market may start to look different. So the recent low and high should be the range, and it can be traded with stop losses. The problem with Franco-Nevada is that the valuations are high compared with other companies in the sector. So a decisive breakout above $45 will take some doing.
